If real GDP grows by (8%) but real GDP per capita grows by only (2%) approximately how much did population grow?
Answer and explanation
Correct answer: (6%)
The governing identity is real GDP per capita = real GDP divided by population. In growth-rate form, approximately, per-capita GDP growth equals total real GDP growth minus population growth. Therefore population growth is approximately 8% − 2% = 6%. Option B is correct. The exact multiplicative calculation gives a very similar figure, so the approximation is appropriate; 2%, 8%, and 10% confuse one of the given rates or add them incorrectly.
Frequently asked questions
What is the correct answer to this question?
(6%)
Why is this the correct answer?
The governing identity is real GDP per capita = real GDP divided by population. In growth-rate form, approximately, per-capita GDP growth equals total real GDP growth minus population growth. Therefore population growth is approximately 8% − 2% = 6%. Option B is correct. The exact multiplicative calculation gives a very similar figure, so the approximation is appropriate; 2%, 8%, and 10% confuse one of the given rates or add them incorrectly.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
